IndigoVision chairman on defensive as shares dive

SHARES in Scottish video security systems specialist IndigoVision tumbled 15.5% yesterday on a trading update but chairman Hamish Grossart declared the company was telling the market it was "steady as she goes".

Asked if he was surprised by the fall in the shares, which dropped by 62p to 338p and cut the firm's stock market worth by £4.7 million to £25.5m, Mr Grossart replied: "I have long since stopped being surprised when share prices go up and down. It is markets that do that – not me. My job is to make the company profits go up."

There was significant opposition to Mr Grossart's re-election to the IndigoVision board, although this resolution was still approved by a sizeable majority at the company's annual meeting yesterday.

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The company said that proxy votes in respect of 220,650 shares were against his re-election. However, proxy votes in respect of 1.667 million shares were in favour. In addition to these "for" and "against" votes, proxy votes in respect of 562,254 shares were withheld on the resolution to re-elect Mr Grossart.

The chairman told IndigoVision's annual meeting, in Midlothian, that revenues and order intake in the first quarter of its financial year were up by 6% and more than 10% respectively on a year earlier.

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Mr Grossart told The Herald profit margins on IndigoVision's camera range were "slightly lower" than those on its software and encoder range.

Asked by The Herald about the profit margin, Mr Grossart replied: "It was very good in the first quarter of last year. It was perfectly acceptable in the first quarter of this year, but wasn't the same mix as last time."

Jon Lienard, analyst at IndigoVision's own stockbroker, N+1 Singer, said he was sticking with his forecasts for the technology company's results for the full year to the end of next July in the wake of yesterday's trading statement.

He is forecasting sales of £32.4m in the current financial year for IndigoVision, up from £30.3m in the 12 months to July 2012, and underlying pre-tax profits of £3.4m, up from £2.7m.

Asked about the fall in the company's share price yesterday, Mr Lienard replied: "It looks like an over-reaction to me. The (trading) volumes aren't huge. It looks like it is small sellers of small holdings that are moving the price."

He added: "Maybe some of the smaller shareholders were expecting something more positive. I think, in this environment, it was a pretty resilient statement."

Mr Grossart told the annual meeting IndigoVision's overheads had risen "in line with budgets", reflecting spending to support sales growth and further investment in engineering and product development, which he described as the "key to long term-value".

He added: "As the year progresses, we anticipate further benefit arising from a focus on continued product releases and related marketing support, and from the strengthened management team.

"As ever, the visibility of future orders remains short, but we remain of the view that IndigoVision is well-positioned to deliver growth for the year as a whole. Given the outstanding performance achieved in last year's first half, we expect benefits to operating performance to be skewed towards the second half of the current year."

IndigoVision founder Oliver Vellacott, who left as chief executive abruptly late last year after having three separate management buy-out proposals rejected by the board as undervaluing the technology company, last month sold his stake of more than 22%.

And Scottish Equity Partners, which had backed Mr Vellacott's MBO attempts and then considered but decided against making a further offer proposal, sold its 6.63% holding last week.

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After leaving the company, Mr Vellacott mounted then abandoned a bid to oust Mr Grossart as chairman.

IndigoVision employs about 150 people. Its internet-protocol video security solutions are to be found in the likes of city centres, airports, and casinos around the globe.

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